- NASSCOM questioned the logic of the GST notice to Infosys. According to Nasscom, the issue at hand involves the applicability of GST through the reverse charge mechanism (RCM).
- The GST enforcement authorities had been issuing notices for remittance by the Indian head office to its foreign branches for cases where there is no service between the head office and the foreign branch for this RCM.
- Allegedly the tax department ignored the fact, that it is not a case of import of service by the head office from the branch.
- Generally, the supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism.
- Reverse charge means the liability to pay tax is on the recipient of the supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply.
- There are two types of reverse charge scenarios provided in law.
- First is dependent on the nature of the supply and/or nature of the supplier.
- Second scenario is where taxable supplies by any unregistered person to a registered person are covered.
Dig Deeper: Read about the concept of Anti-Profiteering under GST.
